Is your small business 'recognised' or 'invisible'?

Posted by on March 25, 2015

Latest statistics have shown that there are over 4 million active and trading micro business owners. (Micro business owners are those that employ between zero and nine people.) Government schemes are encouraging people that may be unemployed or lost on their current career path to start their own business.

Currently, the government hopes that a further 500,000 people will start a business during the next 12 months; one in seven of the adult workforce in the UK are running their own business at the moment with a higher percentage being employed by a micro business.

However, before anyone else steps out as a self-employed personal trainer, starts up their own business or launches a shop on the local high-street, it is important to understand that current statistics on trading micro businesses may not be accurate – many sole traders are not being counted.

How is a business measured?

It is a common belief that if they are registered with HMRC (HM Revenue & Customs) as a sole trader, something you should do immediately if you have decided to embark on the path of self-employment whether full or part time and are paying tax, that their business will be included in figures quoted in research findings (via media or internet). Unfortunately this is wrong and although it may not matter to some, to many it will.

In order to establish if you are a recognised business or an invisible business, there are a few questions to consider:

Does your business employ staff?

Is your business a limited company?

Is your business VAT-registered?

Businesses that answer no to all the above fall into the ‘invisible business’ category and may not be counted in figures and research.

To be recognised as a trading business by the UK government you need to answer yes to at least one of the above questions.

Recently, it has been found that many sole traders do not wish to employ any staff as they did in the past. This is because they would prefer to work with sub-contractors and associates.

Some businesses do not feel that they need to make their company ‘Limited’ or register with Companies House as it is considered an additional layer of administration to their annual workload, nor does their business turnover more than £79,000 yearly.

This level of turnover, £79,000, is the current level of turnover above which you should be VAT registered. Having a high level of turnover may be considered important to some businesses but profit is one of the most important things that a business can have.

How many ‘invisible businesses’ are there in the UK?

In just one area of the UK, Yorkshire, there are an estimated 45,000 businesses that are considered invisible. If this is just one county in the UK, how many are there in the entire country?

It is important that statistics reflect all those businesses and business owners that are making a difference to the national economy.